Eurobank posts 41.6 pct H1 profit rise

EFG Eurobank beat market expectations yesterday with a 41.6 percent year-on-year rise in first-half group net profit as Greece’s third-largest lender rode a strong wave of household borrowing. Eurobank said net earnings after minorities grew to 318 million euros ($405 million), improving its return on equity (ROE) by 263 basis points to 23.7 percent. Analysts’ average expectations for net earnings was 303 million euros, a 35 percent rise, according to a Reuters poll. Greek banks expect yet another year of strong profitability as consumers continue to take advantage of low real interest rates. «Given the robust financial performance in the first six months, the full-year 2006 net profit (target) of 615 million euros seems to be feasible,» the bank said. Eurobank said net interest income grew 20.4 percent to 758 million euros, with its loan portfolio expanding rapidly despite intense competition. Its total loan book grew 24.5 percent year-on-year to reach 30.4 billion euros. Household lending – consumer loans and mortgages – grew 27.8 percent to 14.6 billion euros, with the bank’s net interest margin was maintained at 3.3 percent, which it said was one of the highest in the Greek market. «Strong retail credit expansion coupled with lower than expected provisions were the drivers behind the bank’s performance in the first half,» said analyst Antonis Kouleimanis at Egnatia Finance. «Commission income also helped.» Looking at asset quality, Eurobank’s ratio of non-performing loans (NPLs) was 3 percent and 90.1 percent covered by loan-loss provisions. Commission income from capital market activities and asset management rose 19.4 percent. EFG Eurobank has a presence in Romania, Bulgaria, Serbia and Albania, and it recently expanded to Poland, Turkey and Ukraine. Its loan book outside Greece grew 85 percent year-on-year to 2.3 billion euros. The group said its cost-to-income ratio shrank 130 basis points to 46.1 percent, despite added costs related to its foray into new markets and opening new branches at home. Eurobank, with a current market value of 8.4 billion euros, trades at 13.4 times 2006 earnings, in line with European peers, whose average multiple is 13.39 according to Reuters Estimates. Its shares gained 0.45 percent to settle at 22.2 euros yesterday. (Reuters)

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